Monday, November 3, 2008

Look at my 401(k) losses so you can ignore yours

I'm starting off with an issue people have been worried about for a month: what's up with the value of my retirement account?

It's easy to see why: October was the stock market's worst month since I was 10 years old. The volatility probably won't end before '09, given the bleak forecast for consumer holiday spending not to mention Wall Street's unpredictable response to the election.

But I've been giving those who ask me if they should pull out of their 401(k)s the answer: Hell No!

Never jump out of the market at the bottom unless you absolutely have to, which is not the case for the majority of 401(k) owners. If you're in your 20s, 30s or early 40s, you're working with at least 20 years before you can withdraw money from a 401(k) without paying heavy penalties, so you'll lose MORE money by withdrawing now than by leaving your money alone and letting the markets correct themselves. And the market will certainly turn around between now and 2028, so chill.

Since the easiest way not worry about a 401(k)s is to ignore your own losses, I'm doing you a favor and posting my own losses below. When you get tempted to look at your own balances just look at how much I'm losing, thank God you're not me and forget about your own troubles.

My IRA lost 16.7 percent of its value in October;
My current 401(k) lost 8.3 percent;
My old one, which I still need to roll over, lost 17.1 percent;
Since May, my net worth has taken a dive of about 51 percentage points, mostly on retirement account losses.

Ain't it great not being me?


Butterrfly said...

I took a peek at my 401K statement about a week ago.. after scraping myself off the ground from the shock of the losses I decided not to look at it again until Jan 2009. Not the best financial strategy, but I will drive myself insane if I check my balance daily.

Keith T. Reed said...

I don't think that sticking your head in the sand until January is "not the best financial strategy". Too many people try to over-manage their retirement accounts, looking at them and rebalancing every few months. There's no need for all that. As long as you have the right mix for your age and risk tolerance, you really don't need to do anything except leave it on cruise control.

Princess Imperial said...

Dayum ... that sucks Keith ... but your losses sounds a WHOLE lot like mine. But you told me about a month ago not to pull out ... so ...

The Champ said...

Everyone is taking a hit, but at least by 2028 we should be filthy rich!

LoveDC said...

I'm like butterfly. I'm trying not to look. I did make adjustments to it by changing the allocations. Not sure if that was a good thing to do, but I did. My IRA however is holding it's changes.

Velvet Jones said...

I do a monthly networth report. Yes, my retirement funds have taking a beating, however my cash and debt positions are great! I'm choosing to focus on the positive, in that right now, I'm in a good position. I have a little savings to cushion and emergency, and I don't have any debt. As far as my long-term savings, well, like Ariel likes to say, slow and steady wins the race. :)